For Borrowers Enrolled at the Start of the Pandemic, Increased Repayment Concerns and Disproportionate Rates of Financial Hardships

By: Ana Fung

Data from our January 2021 survey of California college students show that the pandemic upended a majority of students’ budgets. The financial disruptions have made it more difficult for already financially vulnerable students to cover basic needs like food and housing and disrupted academic plans for over half of students in California.[1] Even before the pandemic, too many student loan borrowers were struggling to repay their debt, including over a million students who newly defaulted on their federal student loans in the 12 months preceding the national public health emergency.[2]

At the start of the pandemic, policymakers were rightly focused on immediately reducing student loan repayment hardship, and in March 2020, suspended monthly student loan payments and interest accrual for almost all federal student loans, and halted collections on defaulted federal loans. As a result, tens of millions of borrowers have benefited from this emergency forbearance status, which currently extends through September 30, 2021.

While this repayment relief has prevented borrowers from falling into new delinquency or default on their federal loans, our survey reveals that three in five California student loan borrowers enrolled when the pandemic began report being more worried about their ability to repay their loans than before the pandemic. Related analysis points to disproportionate financial hardships faced by student borrowers since the pandemic began, as well as an increased likelihood of taking out new, riskier forms of debt to overcome those hardships compared to their peers without student debt.

As a result of the financial strains caused by the pandemic, the California student loan borrowers we surveyed are:

  • Nearly four times more likely than their non-borrowing peers to report having lost their housing (22% vs. 6% of non-borrowers),
  • Three times more likely to report having difficulty paying for child or other dependent care (30% vs. 10%), and
  • Two times as likely to have missed a mortgage, rent, or utility payment (41% vs. 19%).

Because the borrowers we surveyed were still enrolled in school when the pandemic began, some of them may have not entered repayment on their student loans, and therefore would not have experienced the federal payment pause as tangible relief. However, over half (56%) of the borrowers we surveyed report receiving federal emergency aid assistance through their schools– nearly twice the rate of their non-borrower peers (29%). Moreover, the overwhelming majority (87%) of borrowers who received emergency aid from their school report that the assistance was important for supporting their continued enrollment.

At the same time, our survey results point to continued cause for concern about many borrowers’ ongoing financial vulnerability. Particularly troubling is that respondents already carrying student debt are much more likely than their counterparts to have accrued new, riskier forms of debt over the course of the pandemic. One third of students who report having student loans took out new private loans to help weather the pandemic’s financial disruptions, borrowing new private loans at over six times the rate of their peers without any prior loan (33% vs. 5%). Accruing additional credit card debt has been even more ubiquitous, with nearly half (49%) of all borrowers and about a quarter (23%) of non-borrowers reporting increased credit card debt because of the pandemic. Federal student loans are the safest option for students who need to borrow to cover college costs, with lower interest rates, as well as critical protections like deferment and forbearance options, income-driven repayment plans, and the current emergency forbearance relief — which are much less common for private loans or credit card debt.

The fact that the majority of borrowers we surveyed express increased concern about their ability to repay their debt echoes prior survey results showing that student loan borrowers are both confused and anxious about repayment obligations resuming. Given these concerns, policymakers may decide to extend emergency student loan benefits beyond September 30, 2021. Regardless of when the emergency benefits end, the Education Department must take proactive steps now to make sure borrowers are protected once repayment begins again. This work will be essential to preventing a disastrous spike in default and its devastating consequences for borrowers’ futures. These steps should include, at a minimum, providing additional flexibilities after the pause ends to those who are struggling, ensuring that it’s as easy as possible for borrowers to access more affordable income-based repayment options, providing timely and actionable information to borrowers about what to expect once repayment starts, and conducting strong oversight of servicers.

After more than a year since the pandemic’s start, policymakers must not lose sight of the students whose finances and academic plans were abruptly disrupted in March 2020. Our survey makes clear that borrowers who were enrolled at the start of the pandemic have experienced disproportionate difficulties that threaten to increase their risk of long-term, serious financial hardships. Early, strategically targeted efforts to support these borrowers’ transition into repayment will be critical to ensuring a robust and equitable recovery from the pandemic’s economic fallout.

Ana Fung is a program associate for The Institute for College Access & Success

Originally published at on May 11, 2021.

[1] TICAS analysis of a January 2021 online survey of California college students, designed by TICAS and administered by Hart Research Associates, with support from the Michelson 20MM Foundation. Data are self-reported from 875 respondents across all sectors in the state. Respondents were all enrolled in March 2020 and had not yet completed their program in spring 2020 or summer 2020.

[2] Calculations by TICAS using data from the U.S. Department of Education, Federal Student Aid Data Center, Direct Loans Entering Default, Accessed April 21, 2021. Figures represent the number of Direct Loan borrowers whose loans entered default from July 1, 2019 through June 30, 2020. Borrowers who entered default during multiple quarters in the same 12-month period are counted more than once.



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